The company's share price fell as low as A$0.995 following the news, down 17 percent from Wednesday's close and its lowest level since July 2012.

It had recovered some ground by afternoon Asia trade but remained 11.5 percent lower, under performing the broader market which was down about 1.2 percent.

Qantas aircraft on the tarmac at Sydney's International Airport.

Greg Wood | AFP | Getty Images

Qantas also said it planned to cut 1,000 jobs within 12 months as part of its cost reduction program, while the company's CEO and board would take a pay cut.

"The more cynical fraction of the investment community has often run with the mantra of 'never investing in airlines', and with the stock falling on a guidance downgrade, driven by a host of different reasons, you have to feel this statement is correct," Chris Weston, chief market strategist at IG, said in a note.

Despite the sharp fall in Qantas' stock price, Geoff Wilson, a portfolio manager at Wilson Asset Management agrees the airline does not present an attractive investment.

"How much worse could it get for Qantas? That's one of the questions right now," he told CNBC Asia's "Cash Flow."

"The airline industry is a tough industry to be in. We try to invest in undervalued growth companies and Qantas doesn't come into that category for us."